Correlation Between Lord Abbett and Limited Duration
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Limited Duration at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lord Abbett and Limited Duration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Short and Limited Duration Fund, you can compare the effects of market volatilities on Lord Abbett and Limited Duration and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lord Abbett with a short position of Limited Duration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Limited Duration.
Diversification Opportunities for Lord Abbett and Limited Duration
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lord and Limited is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Short and Limited Duration Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Limited Duration and Lord Abbett is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lord Abbett Short are associated (or correlated) with Limited Duration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Limited Duration has no effect on the direction of Lord Abbett i.e., Lord Abbett and Limited Duration go up and down completely randomly.
Pair Corralation between Lord Abbett and Limited Duration
Assuming the 90 days horizon Lord Abbett is expected to generate 1.07 times less return on investment than Limited Duration. In addition to that, Lord Abbett is 1.11 times more volatile than Limited Duration Fund. It trades about 0.12 of its total potential returns per unit of risk. Limited Duration Fund is currently generating about 0.15 per unit of volatility. If you would invest 855.00 in Limited Duration Fund on August 31, 2024 and sell it today you would earn a total of 74.00 from holding Limited Duration Fund or generate 8.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Short vs. Limited Duration Fund
Performance |
| Timeline |
| Lord Abbett Short |
| Limited Duration |
Lord Abbett and Limited Duration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Limited Duration
The main advantage of trading using opposite Lord Abbett and Limited Duration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Limited Duration can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Limited Duration will offset losses from the drop in Limited Duration's long position.| Lord Abbett vs. Western Asset Diversified | Lord Abbett vs. Blackrock Conservative Prprdptfinstttnl | Lord Abbett vs. Aqr Diversified Arbitrage | Lord Abbett vs. Pgim Conservative Retirement |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Valuation module to check real value of public entities based on technical and fundamental data.
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